Two Middle East private equity firms, Siraj and Rasmala, have announced funds targeting Saudi Arabia.

Siraj Capital, a Saudi private equity firm, will set up a $100 million private equity fund to acquire small and medium-sized firms in the kingdom - according to the Reuters. The firm will use the fund to make three to four acquisitions in the hospitality, food and beverage sectors, as well as the service industry sector. (Last year, Siraj Capital made three investments in Saudi Arabia, including Saudi fashion brand Lomar, telecommunications contractor and systems integrator Delta United and Holiday Inn Express hotels)

Dubai investors of Rasmala Investments, a Dubai private equity firm, also plans to spend about one-third of proceeds from a planned private equity fund for investments in Saudi Arabia. Rasmala plans to close this year a private equity fund with a target of $350 million, which is focused on investing in the Gulf countries and Egypt.

Siraj Capital, a Saudi-based investment group, is in talks to set up a private equity fund worth initially up to $100 million (Dh367 million) to acquire small- and medium-sized firms in the kingdom, its top executive said.

"We are now in very preliminary discussions with local institutions... probably the first size will be $50-100 million, in that range, to invest specifically in medium and small companies," Chief Executive Ebrahim Mardam-Bey told Reuters.

The firm will use the fund to make three to four acquisitions in the hospitality, food and beverage sectors, as well as the service industry sector.

"We think consumer-driven businesses like budget hotels, casual dining and food & beverage are a big sector we are looking at right now... also the services industries that feed into infrastructure," he said on the sidelines of a private equity conference.

Saudi Arabia, which has a growing population that exceeds 25 million, is undertaking infrastructure projects worth billions of dollars, attracting both local and foreign investors to the region.

Dubai-based investment bank Rasmala Investments plans to spend about one-third of proceeds from a planned private equity fund for investments in Saudi Arabia within the next four years, its chief executive said.

Rasmala plans to close this year a private equity fund with a target of $350 million, which is focused on investing in the Gulf countries and Egypt.

"We have about $120 million of commitments already there and we plan to close the fund this year," Tamer Bazzari told Reuters on the sidelines of a private equity conference on Sunday.

"We plan to make at least a third of the investments of the fund from within the Saudi market," he said.

Within the Saudi market, the fund will look for opportunities in sectors such as education, manufacturing, and consulting services, Bazzari said, declining to be more specific.

"We are in advanced dialogue with some of these parties and we hope to conclude at least one of these transactions...in the second half of the year," he said.

Bazzari also said that Rasmala is looking to go to the market with its first housing fund during the second quarter of this year. Rasmala announced last year that it is setting up a 500 million riyal Islamic property fund to tap opportunities in mid-income housing in Saudi Arabia.- Reuters